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Deduction

An amount that can be subtracted from a person's or company's gross income to reduce the amount of income subject to tax.

Outsourcing Payment

Any fee, premium, royalty, or service charge paid by a business to a foreign person for labor or services that directly or indirectly benefit consumers in the United States.

Internal Revenue Code of 1986

The main body of U.S. federal tax law, which governs how taxes are collected and enforced.

Foreign Person

Any individual or entity that is not considered a United States person for tax purposes, excluding businesses organized under the laws of a U.S. possession.

Taxable Year

The annual accounting period for which a person or company reports income and calculates tax liability, typically a calendar year or a fiscal year.

Transfer Pricing

The pricing of goods, services, and intellectual property exchanged between related entities (like parent and subsidiary companies) in different countries. This can be used to shift profits to lower-tax jurisdictions.